I N V E S T O R P R E S E N TAT I O N. NASDAQ: BBSI July 2017

Transcription

1 I N V E S T O R P R E S E N TAT I O N NASDAQ: BBSI July 2017

2 FORWARD-LOOKING STATEMENTS Statements in this presentation about future events or performance, including expectations for market opportunities and capacity, growth in new clients, rate of client retention, operating margins, workers compensation liability, gross revenues and diluted earnings per share, are forward-looking statements which involve known and unknown risks, uncertainties and other factors that may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Factors that could affect future results include economic conditions in the Company's service areas and their effect on revenue levels, the effect of changes in the Company's mix of services on gross margin, the Company's ability to retain current clients and attract new clients, the availability of financing or other sources of capital, the adequacy of the Company s workers compensation reserves, future workers' compensation claims experience, the effect of changes in the workers compensation regulatory environment in one or more of the Company s primary markets, the ineffectiveness of the Company s internal control over financial reporting, current and future shareholder litigation, investigation of accounting and securities law issues by government agencies, the collectability of accounts receivable, the carrying value of deferred income tax assets and goodwill, and the effect of conditions in the global capital markets on the Company s investment portfolio, among others. Other important factors that may affect the Company s future prospects are described in the Company s 2016 Annual Report on Form 10-K. Although forward-looking statements help to provide complete information about the Company, investors should keep in mind that forward-looking statements are less reliable than historical information. The Company undertakes no obligation to update or revise forward-looking statements in this presentation to reflect events or changes in circumstances that occur after the date of this presentation. 2

3 CONTINUUM OF AN INDUSTRY Historically, the industry has been commodity-driven. DAY LABOR TEMP STAFFING MANAGED LABOR/ ONSITE PEO PAYROLL 3

4 OUR COMPETITIVE ADVANTAGE BBSI S HIGHEST LEVERAGE POINT DAY LABOR TEMP STAFFING MANAGED LABOR/ ONSITE CONSULTING/ KNOWLEDGE- BASED PEO PAYROLL 4

5 HOW WE ARE POSITIONED TYPICAL OUTCOME: TOOLS, SYSTEMS, PROCESSES Engage as a tactical subordinate Minimal integration with the business TYPICAL OUTCOME: BLUEPRINT TO MORE EFFICIENTLY RUN BUSINESS TYPICAL OUTCOME: WHITE PAPERS Engage as an expert guide Highly integrated with the business 5

6 VISION & PURPOSE FOR APPROACHING THE MARKET BUSINESS FORMATION GRASSROOTS GROWTH INFLECTION POINT MANAGEMENT PLATFORM STABILITY The owner has an Early success Organization Insight, A professionally idea & puts requires moves beyond its guidance & tools managed everything into it employees original structure, that bring organization that becoming more predictability to maintains the spirit complex & the business & culture of less efficient the entrepreneur 6

7 A PHILOSOPHY OF CLIENT ALIGNMENT OUTCOMES Stability Capacity Leverage Profitability Predictability 90%+ Retention 7

8 VALUE PROPOSITION TO OWNERS RE- L E V E R RE- L E V E R V O L U M E P L AT E A U W O R K I N G I N F L E C T I O N P O I N T B U I L D O R R E I N V E N T T I M E 8

9 FIELD STRUCTURE & FOOTPRINT 95 teams housed in 57 physical locations Decentralized structure Most clients within 50-mile radius of BBSI branch 9

10 TRAITS OF A BBSI PROFESSIONAL INNATELY CURIOUS ENTREPRENEURIAL STRONG BUSINESS ACUMEN OWNERSHIP MENTALITY SEASONED PROFESSIONALS 10

11 SUSTAINABLE CULTURE Leadership is in our DNA Decentralized structure We teach what we learn 11

12 MARKET OPPORTUNITY BBSI works with approximately 4,900 businesses roughly 3% BBSI works with less than 1% of target market in U.S. Source: Statistics of U.S. Businesses, SBA Office of Advocacy, Updated Feb 9,

13 HOW WE BUILD REFERRAL-BASED CHANNELS A PATH TO MUTUAL UNDERSTANDING ~25% YIELD +90% CLIENT RETENTION 13

14 HOW WE SUPPORT OUR BUILD $500K investment per team Capacity of ~90 clients Average: 30 employees per client Ability to lever operating margins 14

15 OUR APPROACH TO MARKET EXPANSION Leverage net client add to support referrals BBSI generates a majority of its business in the Western third of the U.S. Expand within existing markets build branches within branches Penetrate adjacent markets to meet demand 15

16 DRIVERS OF OUR GROWTH ORGANIC GROWTH New client stack Runoff Same customer sales LEVERAGE Capacity utilization against infrastructure SCALE Expansion 16

17 ANNUAL NET REVENUE GROWTH $Millions $841 $741 $636 $537 $316 $

18 Gross Revenues ($Millions) ANNUAL GROSS REVENUE & PEO CLIENT GROWTH ~4,900 ~16% expected gross revenue growth for the next 12 months (thru Q1-18)² PEO Customers¹ ~1,800 ~2,200 ~2,600 ~3,000 $3,357 ~4,000 $4,016 $4,693 ~$5,400 $2,817 $2,081 $1, Thru Q1-18² 1) PEO customers defined as the active number of customer Federal Employee Identification Numbers (FEINs). Please take into consideration that this non-gaap figure is a broad estimate of the Company s actual client count. However, the Company does believe the number represents an effective proxy for the health of its business client count represents the Company s estimated client count at the end of the year. 2) Guidance reiterated on May 4, Represents expected revenue in the next rolling 12 month period (thru Q1-18). 18

19 ANNUAL DILUTED EPS PERFORMANCE $3.47 $3.65 $1.09 $1.47 $2.12 $2.55 Includes ~$0.13 per share for legal costs and ~$0.39 per share for an increased tax rate vs $ ¹ E² 1) The net loss per share in 2014 is primarily due to expense associated with an increase in the Company s reserve for workers compensation claims liabilities of approximately $104.2 million. 2) Guidance reiterated on effective May 4, Includes an estimate of $1.6 million (~$0.13 per diluted share) in remaining costs associated with legal costs related to securities law issues, as well as the return to an effective tax rate of ~33.5% (an incremental cost of ~$0.39 per diluted share versus 2016 tax rate). 19

20 KEY TAKEAWAYS Drive development in referral channels Expand within existing markets Penetrate adjacent markets to meet demand Proactively build structure to support growth 20

21 $2,817 $3,357 $4,016 $4,693 KEY STATS: BBSI (NASDAQ) Trading Data July 5, 2017) Stock Price $ Week High/Low $66.93/$38.77 Financial Highlights Mar 31, 2017) Gross Revenues (ttm) $4,829M Income from Ops. (ttm) $24.1M Annual Gross Revenues ($Millions) Avg. Daily Vol. (3 mo.) 39,204 Diluted EPS (ttm) $2.07 Shares Outstanding 7.3M Cash¹ (mrq) $343.4M Institutional Holdings 76% Insider Holdings 4% Valuation Measures Market Cap $414.1M Total Assets (mrq) Total Debt (mrq) Total Liabilities (mrq) Total Equity (mrq) $597.4M $4.6M $539.9M $57.5M P/E (ttm) 27.6x Dividend Payout Ratio (ttm) 43% Source: CapitalIQ & Company filings. ttm = trailing twelve months; mrq = most recent quarter. 1) Represents cash and cash equivalents, investments, and restricted cash and investments Clients ~2600 ~3000 ~4000 ~

22 BBSI CONTACTS Barrett Business Services, Inc NE Parkway Drive, Suite 200 Vancouver, WA Tel (360) Investor Relations Liolios Group, Inc. Cody Slach Tel (949)